"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises

Wednesday, December 29, 2010

Michael Forsyth calls for Referendum on Scotland Bill

Former Scottish Secretary Michael Forsyth is calling for a referendum on the Scotland Bill arguing that the public has a democratic right to decide whether or not they want to transfer powers over income tax from Westminster to the Scottish parliament.

The Scotland Bill is a Westminster piece of legislation and is the outcome of the work of the Calman Commission chaired by Sir Kenneth Calman.

The Commission, set up by a unionist coalition of the Labour, Conservative and Liberal Democrat parties after the SNP won the 2007 Holyrood election, was widely perceived as a strategy designed to contain the new SNP government's demands for economic independence.

Michael Forsyth, now Baron Forsyth of Drumlean, is to table an amendment before the House of Lords arguing that there is a clear principle for a referendum on the plans. His case points to the 1997 referendum question which asked whether Scots wanted their parliament to have the power to vary income tax at a rate of plus or minus 3p on the basic rate. The new tax plans are significantly wider argues Forsyth and empowers MSPs to keep income tax 10p lower than the rest of the UK and no ceiling on rises.

Forsyth's point is a moot one as, unlike the 1997 referendum, the Scottish public has no real say over the bill which will define the tax powers and other powers of their parliament in Holyrood. He said:

"When the bill comes before the Lords, I will table an amendment that requires them to have a referendum on the tax-raising powers."

"I think if you are going to do something like that, those in favour have to put their case."

Calman: Insufficient and "unworkable"

The moves by Lord Forsyth will be welcomed by those who want to see not less but more powers for the Scottish parliament and who regard the Calman Commission proposals as insufficient and potentially damaging.

Scotland's prestigious Council of Economic Advisors (CEA) recently concluded in their Third Annual Report that the Calman Commission proposals "do not go nearly far enough" and that "full financial responsibility" with "control of the major tax levers" is Scotland's "best chance" to maximise its economic potential. Marc Coleman, former economist at the European Central Bank, said of the proposals: 'Scotland requires immediate fiscal autonomy and Calman falls well short of fiscal autonomy.'

As Briton's now face sovereign debt, economic and currency crises, Scots appear to be warming to the idea of economic independence as a means of sheltering Scotland from the parlous state of the UK economy.

A recent opinion poll by TNS shows that the union is now supported by a minority of Scots (44 percent). The Scottish electorate has shown in the recent Scottish Social Attitudes Survey 2010 that it would like the Scottish parliament to assume significantly more powers, including full control over taxes (57%) and benefit payments (62%). The Scottish people's desire for 'full control' over taxes is significantly more that what the Scotland Bill is offering.

The Calman proposals have not only been criticised for being insufficient but heavily berated by a number of eminent economists such as Jim and Margart Cuthbert and Andrew Hughes-Hallett as "seriously flawed" and "unworkable". The Cuthberts said:

"Our view is that the Calman proposals on income tax powers are seriously flawed, and pose a major danger to the Scottish economy..

"Implementation of the Calman proposals on income tax would be extremely dangerous; with a real risk that the perverse incentives implicit in the proposals would push Scotland into a worsening cycle of increasing Scottish income tax rates and relative economic decline."

The Scottish parliament's Scotland Bill Committee which is to scrutinise the bill, is chaired by former Labour leader in Scotland, Wendy Alexander. Controversially, Ms Alexander was forced to resign in 2008 owing to allegations of financial corruption.

The probity of the entire process leading to the Scotland Bill was further questioned after it emerged that Jim Gallagher had been invited to be a key advisor to the committee. Mr Gallagher, who was chosen by former Prime Minister Gordon Brown to oversee devolution, is known to be hostile to the Scottish parliament gaining more powers and oversaw the writing of the Bill meaning he has overseen the Bill from all points of input. He recently pennedan articlefor The Telegraph with the title: "Why the Scotland Bill is good news for England"

Despite the polling evidence, current Scottish Secretary Michael Moore, who launched the Scotland Bill at the end of last month described it as: "The settled will of the Scottish people." A reference to former Labour leader John Smith's famous quotation in relation to Scotland's desire to have its own parliament.

Commenting on Lord Forsyth’s call for a referendum on the London parties’ Scotland Bill proposals, SNP Campaign Director Angus Robertson MP said "any referendum must include the options of independence and financial responsibility since polls show the ambitions of the Scottish people go beyond the limited ambitions of the Bill."

AV Referendum

Michael Forsyth's plan to table a referendum in the House of Lords will draw attention to the controversial AV referendum which will be held on the same day as the Scottish and Welsh parliamentary elections. The choice of May 5th for the referendum caused outrage in Scotland and led to claims of disrespect from the UK government.

It sees a curious situation where a widely sought referendum on independence is denied Scots whereas a referendum on the AV voting system, which few support, is forced upon the nation. The move has raised questions over the democratic conduct and legitimacy of a UK coalition government. The Tories and the LibDem parties registered third and fourth place in terms of votes cast in Scotland at the last Westminster election.

This democratic inconsistency has lead to a campaign by theBella Caledoniaoutlet which calls on Scots to spoil their AV referendum ballot paper by writing the word 'Independence' across it. Spoiled ballots must be counted and the 'result' announced and the team behind the campaign hope that by spoiling their ballot papers then Scots can turn the tables on the Tory/LibDem coalition and force their own 'independence' referendum on London.

2 comments:

the Commission set up by the majority of the elected Representatives of the Scottish peoples.In whose hands the Scottish people gave freely their sovereignty until the next election.As opposed to the minority snp administration whom are a minority within holyrood and throughout Scotland.

eminent economists Nationalist and with even more eminent economists Unionist given an even more believable case for staying within the union.